Lettings fee ban WILL happen but ‘unintended consequences’ to be monitored – housing minister

The lettings fee ban will happen but legislation has been introduced in draft so it can be properly scrutinised by all parties, the housing minister has said.

In one of his first appearances discussing housing and agent issues in the House of Commons, Alok Sharma said the lettings fee ban consultation had received more than 4,700 responses so had to be property scrutinised.

Speaking at a Westminster Hall debate yesterday on the fee ban, called by Conservative MP and Hunters co-founder Kevin Hollinrake, Sharma said: “The lettings fee ban will deliver a more competitive, affordable and transparent lettings market.

“A good lettings agent provides a valuable service – the problem is they are chosen by the landlord.

“It is important to ensure the fee ban is carefully considered.”

He failed to give a date on when the draft tenant fee bill would be introduced despite concerns from MPs over how long it is taking, merely saying it would come “soon”.

Hollinrake used the debate to back the ban but warned of “unintended consequences” such as costs being passed on to landlords and rents rising or agents rejecting tenants with poor or complicated credit if they have to bear the cost of referencing them.

He also said enforcement needed to be better and called for penalties for landlords and agents flouting rules to be increased to £30,000, something Sharma appeared to suggest he would consider.

Sharma rejected claims that rents would rise as a result of the ban, claiming that many fees charged were already unnecessary and excessive, adding: “We will keep the impact of the ban under review.”

Most MPs during the debate backed the ban and raised issues with the state of rental accommodation and level of rents charged.

Siobhain McDonagh, Labour MP for Mitcham and Morden, said tenants were “lost in the housing crisis” and warned that councils don’t have sufficient funds to enforce rules on rogue agents and landlords.

Charles Walker, Tory MP for Broxbourne, raised another issue of self-letting landlords being able to use insured schemes to hold on to a tenant deposit at the end of the tenancy and leaving the tenant to challenge it with a dispute service.

He later clashed with Sharma over whether this was the case and the housing minister promised a meeting on this subject.

In a rare show of support for agents, Norfolk MP Sir Henry Bellingham said he had heard no complaints about fees in his constituency and warned against creating a “blunt instrument” based on issues in big cities such as London.

Commenting on the debate, David Cox, chief executive of ARLA Propertymark, was disappointed to see Sharma holding firm on the ban.

Cox said: “It’s important that the Government understands the value of the services agents carry out for both landlords and tenants when shaping its final legislation.

“We are therefore disappointed in the housing minister’s comments declaring that the Government’s position remains that all fees will form part of the ban.

“As Kevin Hollinrake acknowledges, the ban on fees for referencing checks will cause problems. Agents are required to carry out these checks by law, and they invest both time and resources to ensure this work is carried out properly. The Government must now consider exempting referencing checks from the ban as well.”

National Approved Lettings Sscheme CEO Isobel Thomson said: “NALS welcomed the cross-party debate on the fee ban and confirmation that the Minister has adopted a common sense approach on holding deposits with his announcement that they will be exempt from the ban but he gave no clear indication of when legislation might come forward.

“We were encouraged that MPs quite rightly expressed concern about the implications of rent increases as a result of the ban and the impact on those least likely to afford them. Of real interest was the minister’s commitment to consider the ban on tenant fees in the context of wider work in the private rented sector, something NALS called for earlier this year.

“This is positive news and an indication that he has listened to the call for an end to piecemeal legislation. His clear reference to regulation was welcome as well as his willingness to explore options for what a regulatory framework might look like.”

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16 Comments

  1. Will

    It is demanded by Shelter & the Government will introduce it because it is popular with the greater number of people ie the ratio of landlords to tenant is in tenants favour. There will beyond any doubt be repercussions. There are many clever people who are sufficient innovative that a route around things will be found. Our Bully Boys at Westminster have the power and will use it. It is Government (national & Local) that caused much of the housing crisis by asset stripping which started in the eighties with right to buy and continues in its various guises. The sudden & rapid more recent (much from eastern europe) mass immigration compounded the problem. Usually markets would take up the slack but salaries have not been adequate to encourage house building at the necessary levels. Companies in the cheap labour market have succeeded but take no responsibility to house those they employ thus increasing housing demand whilst supply more or less has stagnated and social housing sold off. The failure in Government policy is the reason Government attack landlords and AGENTS. Bully boy legislation  will not resolve the housing problems nor will exaggerating the claims of rogue landlords or agents. Indeed more property seems to be hitting the market as  the tide of EU immigration has faltered with some from the eu  becoming reluctant to come to the uk worried about Brexit.

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  2. Votta583

    “The lettings fee ban will deliver a more competitive, affordable and transparent lettings market”

    This ridiculous comment keeps being repeated  and is a weak reasoning for the fee ban!!!

    I witnessed this debate firsthand  and the arguments for the fee ban  were are clutching at straws to be polite where as the evidence against answered every question!!!

    The debate  went on to talk about the poor state of the housing industry as opposed to the real bones of why they are banning phase in the first place.

    In order to fix the housing market they need to in force legislation already in place and now they are creating further legislation to ban face expecting that to help.  However if you are a letting agent on the front  line working in TODAYS industry  you will realise that No landlords will front of the additional cost  and find their own tenants.  Therefore no more need for Letting Agents  and guess what will see a huge rise in possession orders and poor living standards,  injuries and deaths  agents will no longer want to get specialist advice if they’re not getting paid for.  For I’m going to start training to become a solicitor because they will be raking it in when the fee ban comes in.

    Sir Henry Bellingham was the one person that should have been listened too there yesterday.

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  3. CountryLass

    I just don’t see how they think its right for Tenants not to have to put down any money for a property. Are they going to stop charging for mortgage valuations and the start up fees there, as well as the money that you pay to a financial advisor? It’s the same thing! A financial commitment that you are serious about renting/purchasing a property, and confident enough in your financial history to secure it.

     

    I agree that there are many agents out there who over charge, I know of one in my area who seems to charge several hundred pounds just to credit reference, then there is an admin fee and inventory charge on top of that. This practice is unfair and out of order, I don’t think any of us would argue that? But to charge a fair cost for referencing, and a contribution towards admin and inventory is not out of order I believe.

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    1. Rent Rebel

      I just don’t see how they think its right for Tenants not to have to put down any money for a property..

      A financial commitment that you are serious about renting/purchasing a property,

      Holding deposits are exempt from the ban.

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      1. CountryLass

        Which is fine for those who charge holding deposits, but we don’t, or at least we don’t call them that.. Once a tenant puts in the application and pays the tenancy fee, we stop all viewings until it’s either accepted or declined. And no, they don’t get their money back if they fail.

         

        So how much is a typical holding deposit?

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  4. MF

    I’ve always said, “cap fees, don’t ban them”.  It solves the problem. Yet the government doesn’t seem to think this is a good and fair idea – despite it being widely accepted that the problem is only the excessive charges made by some agents. I suppose it’s because they don’t want the burden of policing a cap (or can’t be bothered).

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  5. Mark Walker

    I can see the obvious problem with the ban on application fees and it doesn’t feature anywhere in the aforementioned discussions.

     

    Even if there is a ban (which I still see as the Tories taking a hammer to their own voting block, i.e. yet more political suicide from the present shower) what promise of enforcement is there given the widespread lack of enforcement of just about every current property legal matter.  The chief parties responsible for causing this ban will sure as hell be the ones doing their utmost to loophole it by fair means or foul.

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  6. basher52

    The question i have is do i hit my tenants all with a rent increase now or when the ban is introduced. Soon they’ll pretty much all be paying at least an extra £300 per annum.

    The market will support it because supply is the lowest its been for years!

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    1. Rent Rebel

      Hello Fagin.

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  7. HITMAN32

    Sharma said: “The lettings fee ban will deliver a more competitive, affordable and transparent lettings market”
    Wake up and smell the coffee.

    TOTAL RUBBISH. This is just an attack on Letting Agents, do MPs really have any idea”? I literally cannot understand the argument.
    CountryLass said: Mortgage lenders and intermediaries charge fees for their services, why aren’t they being banned?

    Many Private landlords who don’t use agents will be given an even looser lead to exploit tenants and still NOT pay tax on their income! Even the law on protection of tenant’s deposits is ignored by many private landlords.

    I think a ban on fees will drive letting’s more underground, increase evictions, generate poorer housing conditions and create more repossessions. It will defiantly increase rents.

    David Cox said: “It’s important that the Government understands the value of the services agents carry out for both landlords and tenants when shaping its final legislation”.  Well that’s just fell on deaf ears!

    I invite Alok Sharmato to come along to my office and witness the day to day running of a letting agent, it would give him a reality check. 

     

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  8. Property Peep

    Will it be legal to charge a larger first months rent ? This is then a rent payment and not a fee.

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    1. Rent Rebel

      Look up some housing law.

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  9. JohnGell

    It may look like an attack on letting agents but the reality is it will raise standards and minimise poor practice.

    https://www.linkedin.com/pulse/tenant-fee-ban-raise-standards-john-gell

     

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  10. jobit78

    As a landlord I have properties across the country and rely on good letting agents. It’s right that they should be compensated for the work they do and I am disgusted by the blanket view of them. If MPs spent more time doing the job they are elected and paid to do and less time on silly pet projects for them to play with the better off the country would be.  The country is a shambles as it is, and this is the straw that will break this camel’s back. I really feel that I will be selling up, pay my taxes find a little known part of the world and leave the country. Fed up with it all!

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  11. The_Maluka

    ‘unintended consequences’ to be monitored
    politicians speak for monitor but do nothing.

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  12. JB123490

    Anyone that thinks this won’t backfire is nuts.

    All they concentrate on is the technicalities not practicalities!

    – A letting agents will the only shop in the world where you walk in off the street and the shop owner spends money on you !! thats how dumb this is!

    – So what stops an tenant applying fro numerous houses if it’s free? – let me guess, they just wouldn’t do that !

    – What stops a tenant lying on their forms now? – nothing it’s not their money they’re are wasting is it!

    – What stops an agent swapping tenants if a better one comes along? – nothing, no money changed hands, so no contract.

    – If you have a bad credit, look unsavory, have a pet or whatever; forget it I’m not investing my money in you to rent you a house – will be the instruction.

    The list goes on..

    Tenants are about to take part in the biggest backfire yet and I’ve been saying for a year! :

    http://qmentis.com/economics/property/letting/letting-agent-fees-ban/

    Meanwhile…..there is no ban on the Mortgage Application fees that average £999 is there? nothing do with Mp’s chums running the banks I suppose.

     

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